Godrej Agrovet eyes $200 m through IPO

Godrej Agrovet Ltd has hired Kotak Mahindra Capital Co Ltd and is in the process of hiring two more investment banks to manage an initial public offering (IPO) through which it plans to raise $200 million, said three people aware of the development.

“They have been meeting with banks over the past few weeks. At least 10 banks, both foreign and domestic, have held talks with them. So far, they have appointed Kotak to manage the IPO process,” said one of the three people cited above, requesting anonymity as the talks are private.

The company has also shortlisted Axis Capital and Credit Suisse, and the IPO mandate is expected to be handed to them soon, said a second person.

The IPO is likely to be a mix of primary capital raising as well an offer for sale by private equity investor Temasek Holdings Pte, to help the Singapore’s stateowned investor dilute a part of it shareholding in the company, said the third person cited above, also requesting anonymity.

In December 2012, Temasek picked up a 19.99% stake in Godrej Agrovet Ltd for ₹572 crore.

“As a company policy the Godrej Group does not comment on market speculation. As and when the process starts, we shall announce it after all the statutory requirements are fulfilled,” BS Yadav, MD, Godrej Agrovet, said in response to an email query.

A spokesperson for Temasek said the firm does not comment on speculation. Credit Suisse declined to comment.

Emails sent to Axis Capital and Kotak Mahindra Capital did not elicit any response.

An October research report on Godrej Industries by Axis Capital valued Agrovet at ₹7,000 crore, based on numbers expected in 2017-18. According to the report, the Agrovet business is attractive on many fronts.

Axis Capital estimates that Godrej Agrovet will be worth $2 billion by 2020. It predicted that with high growth in dairy and poultry brands, coupled with steady growth in the animal feeds and palm oil business, Agrovet’s revenue would grow to ₹11,000 crore by 2020-21 at 20% CAGR, with ₹600 crore in net profit.

Last fiscal (2015-16), Agrovet generated revenue of ₹4,400 crore with ₹200 crore in net profit, contributing 41% of Godrej Industries’ total revenue for the same fiscal year, Mint reported on February 22.

GODREJ INDUSTRIES OWNS 60.8% IN AGROVET, WHICH IS IN BUSINESSES SUCH AS AGRIINPUTS, ANIMAL FEEDS, PALM OIL MANUFACTURING, DAIRY AND POULTRY